AI craze cools down! "Tenfold stock of the year" AMD plunges 20%, Nvidia tumbles 10%, ARM also collapses

On Friday, April 19th, "Tenfold Stock of the Year" Super Micro Computer (SMCI) plummeted over 20%, with its stock price falling by 23% to a new low in over two months.

Super Micro Computer stated in a brief press release on Friday that it will announce its third-quarter performance on April 30th. However, the company broke its tradition of providing preliminary results, causing investors to worry and frantically sell off the stock.

Looking back to January this year, 11 days before announcing its second-quarter financial report, Super Micro Computer raised its sales and profit guidance. The impressive performance forecast led to a violent surge in Super Micro's stock price, driving the latest wave of surges in AI concept stocks in the first quarter of this year.

It is widely believed in the market that Super Micro did not provide a positive advance declaration, which is considered negative, especially at a crucial time in the field of artificial intelligence, intensifying market concerns. If this performance turns out to be outstanding again, they may say something that could be worrying.

It is worth noting that Super Micro did not respond to media inquiries on Friday.

An analysis article mentioned another situation: there are more and more so-called direct orders for Super Micro's H100, which used to exist but now with shorter delivery times, around 1-1.5 months.

Super Micro produces computers and sells them to enterprises for website servers, data storage, AI training, and other businesses. Its partners include NVIDIA, NASA, and Japanese electronics companies. The soaring stock price of Super Micro in recent years is mainly due to the strong demand for its servers (the infrastructure for AI chips) in the market. For Super Micro, it doesn't matter who wins the AI race. Because if you buy AI chips, whether from NVIDIA or other companies, you need to connect and cool the chips - this is where Super Micro comes in.

Super Micro Computer is one of the most promising tech stocks in 2022 and 2023, with a surge of 246% last year and 87% the year before. The sharp drop on Friday made it the biggest decliner among the S&P 500 index components that day, just a month after the company joined the S&P 500 index. As of Friday's close, Super Micro has fallen by over 40% from its high this year, but still has a gain of about 150% year-to-date.

Super Micro also dragged down a group of tech stocks including NVIDIA, with chip stocks and AI concept stocks suffering heavy losses on Friday. These tech companies did not release any news that could have caused the stock price to plummet.

NVIDIA plummeted 10% on Friday, marking its largest single-day decline since the early days of the COVID-19 outbreak in 2020. Its market value fell to $1.9 trillion during trading, hitting a two-month low. Since October last year, NVIDIA's closing price has never fallen below the 50-day moving average, which is a key technical level. NVIDIA's double long ETF fell by 20% "NVIDIA Concept Stock SoundHound fell more than 7%."

In terms of other important technology stocks, Arm fell nearly 17%, AMD fell over 5%, Meta fell over 4%, Intel fell 2.4%, Microsoft and Apple fell over 1.2%.

In fact, this is not the first time that AMD has caused a collapse in AI concept stocks such as NVIDIA. In August last year, AMD plummeted more than 23% in a single day, also dragging NVIDIA down nearly 5% on the same day.

The Nasdaq was also dragged down, plummeting over 2%, continuing its recent decline, in stark contrast to the Dow, which was still rising that day. Technical indicators show that the Nasdaq has clearly entered an oversold stage. However, it should be noted that technical overselling does not necessarily mean a rebound will follow.

The accelerated decline of semiconductor, AI, and other technology stocks this week began with the financial report of ASML, the highest market value technology company in Europe. ASML's first-quarter new order value fell far short of expectations, plummeting 61% from the previous quarter. Previously, in the fourth quarter of 2023, its order amount set a record. ASML explained that the sharp decline in new orders was mainly due to a significant drop in demand for the most advanced EUV lithography machines. The market believes that the performance announced by ASML may be a warning to the tech giants that will report their financials in the future.

Just one day after ASML announced its financial report, TSMC, the world's largest chip foundry located in Taiwan, China, released a mixed financial report. Benefiting from strong AI demand, TSMC's net profit in the first quarter increased for the first time in a year, but its downward revision of global wafer foundry industry growth expectations significantly dragged down the company's stock price, intensifying market concerns about overall technology stocks.

Some analysts point out that people seem to think that artificial intelligence trading will always rise. It has become crowded and is now experiencing a fierce retreat. This is a collapse of technology stocks, with funds withdrawing from technology stocks, especially from the hot artificial intelligence trades.

Other analysts point out that since the start of the AI market last year, the entire sector, even the U.S. stock market, has not experienced a particularly significant pullback, having risen continuously for a year and a half. This adjustment is more likely a healthy pullback, as large funds will not easily leave the AI table. Going forward, attention should be paid to NVIDIA's performance and the capital expenditure of important technology companies this year. However, for the market to rise again, incremental funds may be needed, which may require a new "grand narrative."